BMO Capital analyst Benjamin Pham upgraded the rating on Capital Power (CPX – Research Report) to a Buy on April 22, setting a price target of $64.00.
Benjamin Pham has given his Buy rating due to a combination of factors that highlight Capital Power’s strategic positioning and growth potential. The recent acquisition of PJM assets is a key driver, as it diversifies the company’s cash flow and reduces reliance on the Alberta power market, while also increasing its presence in the U.S. market. This acquisition is expected to significantly enhance Capital Power’s scale and financial metrics, with adjusted EBITDA and free cash flow projected to rise substantially.
Moreover, the acquisition is seen as highly accretive, with attractive valuation multiples and expected average accretion to AFFO per share over the next five years. Despite some concerns about the decrease in contracted business mix, the overall risk/reward profile is favorable, supported by the company’s ability to maintain its investment-grade credit rating. The equity offering has also addressed the funding requirements for the acquisition, positioning Capital Power for further growth opportunities in the evolving energy market.
In another report released on April 23, TD Cowen also initiated coverage with a Buy rating on the stock with a C$66.00 price target.
CPX’s price has also changed slightly for the past six months – from C$51.630 to C$47.580, which is a -7.84% drop .